[Asia Economy Reporter Seungjin Lee] GS Retail posted sluggish results in the second quarter of this year due to the impact of the novel coronavirus disease (COVID-19). While convenience stores and supermarkets performed well, the hotel and health & beauty (H&B) businesses were directly hit by COVID-19.
On the 6th, GS Retail announced that its operating profit (provisional) for the second quarter of this year was 59.2 billion KRW, a 23.2% decrease compared to the same quarter last year. Net profit for the period was 33.6 billion KRW, down 38.6% year-on-year. Sales during the same period were 2.21 trillion KRW, a 4.2% decline compared to the same period last year.
Looking at the performance by business division, convenience store GS25 recorded sales of 1.7629 trillion KRW in the second quarter, a 0.3% increase compared to the same period last year. Operating profit was 70.2 billion KRW, down 19% from last year due to sluggish same-store sales and an increased proportion of tobacco sales.
A GS Retail official explained, "GS25 store openings proceeded smoothly, focusing on prime locations, but due to the prolonged COVID-19 situation, delays in school openings and decreased foot traffic led to continued sluggishness in school and academy districts as well as tourist areas. Additional costs increased due to extra waste disposal support and sales promotion support to respond to COVID-19."
The GS Retail official added, "Since March, monthly sales growth rates have gradually improved due to new contactless services such as delivery and parcel services, as well as the introduction of membership in the form of a subscription economy."
The supermarket business, GS The Fresh, turned profitable with an operating profit of 9.2 billion KRW in the second quarter, an increase of 10.2 billion KRW compared to the same period last year. Sales were 314.6 billion KRW, down 18.2% year-on-year, reflecting the impact of closing underperforming stores since the fourth quarter of last year.
On the other hand, the hotel business was directly hit by COVID-19. Parnas Hotel’s operating profit in the second quarter was -11.8 billion KRW, a decrease of 24.6 billion KRW compared to the same period last year, turning to a loss. In particular, the occupancy rate of the Grand InterContinental Seoul Parnas in the second quarter dropped by 19 percentage points compared to the first quarter and fell sharply by 62 percentage points year-on-year.
GS Retail analyzed that food and banquet sales sought operational efficiency through shortened operating hours and workforce reallocation, but the results were somewhat insufficient.
H&B store Lalavla expanded its losses with an operating profit of -4.8 billion KRW in the second quarter. Sales during the same period were 25 billion KRW, down 37.5% compared to the same period last year.
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